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Americas Data Center Colocation Market Size, Share, & Trends Analysis Report by Electrical Infrastructure (UPS Systems, Generators, Transfer Switches and Switchgears, Rack PDUs, and Others), Mechanical Infrastructure (Cooling Systems, Racks, Others, and Cooling Technique), General Construction (Building Development, Installation & Commissioning Services, Building Design, Physical Security, and DCIM), Service Type (Retail and Wholesale), and Geography (US, Canada, Brazil, and Other Latin America) Industry Analysis Report, Regional Outlook, Growth Rate, Trends, Competitive Landscape, Share & Forecast, 2020–2025
|MARKET SIZE (REVENUE)||USD 12 BILLION (2025)|
|MARKET SIZE (AREA)||3.8 MILLION SQUARE FEET (2025)|
|Market Segments||Electrical Infrastructure (UPS Systems, Generators, Transfer Switches and Switchgears, Rack PDUs, and Others), Mechanical Infrastructure (Cooling Systems, Racks, Others, and Cooling Technique), General Construction (Building Development, Installation & Commissioning Services, Building Design, Physical Security, and DCIM), Service Type (Retail and Wholesale)|
|Geographic Analysis||North America and Latin America|
|Countries Covered||US, Canada, Brazil, and Other Latin America|
The Americas data center colocation market size will reach revenue of USD 12 billion by 2025. The market is dominated by the US, Canada, and Brazil, with the US contributing to around 83% of investments in 2019. Several factors are responsible for the high growth of colocation services in the region, including the increased demand for cloud-based services and enterprise migration from an on-premise data center to a colocation facility in Latin America. The cost of colocation is higher in the US than in other countries in the region. The data center colocation market will grow at a CAGR of around 6%. However, the outbreak of the COVID-19 pandemic is likely to drive the market and likely increase the revenue of colocation providers by over 20% in 2020.
Colocation providers involved in expanding existing capacity will continue to drive market revenue during the forecast period. The market will also witness new providers grow their revenue. America's data center colocation market saw significant M&A activities in 2019 due to the rise in demand from several businesses, leading to data center suppliers. This is likely to continue during the forecast period. The enterprise investment in facilities will continue to decline because of the budget and time constraint in developing and operating data centers. This will, in turn, increase the demand for colocation services. Also, the availability of modular pre-fabricated data centers with the rack capacity of up to 20 will pose a major threat to the retail colocation business.
This research report includes a detailed segmentation by
The adoption of 2N redundant UPS systems has been increasing among several data center facilities. Generators and cooling systems are deployed in N+1 redundant configuration. The procurement of renewable energy for data centers will reduce the demand for generator systems in the market. Most data centers will deploy over 1,000 kVA UPS systems and >2 MW generators, thereby driving the revenue growth of the Americas data center colocation market. Almost 95% of facilities will procure monitored, managed, and switched PDU solutions by 2025. The demand for generators and UPS systems constitutes significant revenue growth in the US market. With the rise in data center power outages and increased critical load, there is a high demand for redundancy in data centers.
Due to the increased unreliability of power supply, the generators market will continue to grow across facilities in Latin America. The market will also witness the strong adoption of Diesel Rotary Uninterruptible Power Supply (DRUPS) technology. They combine both battery and flywheel UPS topology with a diesel generator to provide backup energy during power outages. VRLA batteries are commonly used in data centers, and they are the most popular batteries used in the market currently. However, the emergence of lithium-ion batteries is likely to affect the usage of VRLA batteries. It is expected to contribute significant revenue to the Americas data center colocation market by the end of the forecast period.
A majority of facilities in the Americas are cooled through free cooling systems that facilitate over 4,000 hours per year. The deployment of tall racks of 45U - 52U is experiencing strong adoption in the market. Data center vendors in South-Eastern and Western US are adopting air- and water-cooled chillers with the economizer mode to facilitate partial cooling of the facility using outside air. The redundancy adopted is N+1 or N+N in the cooling segment across the US.
In terms of cooling techniques, facilities built-in 2019 adopted free cooling techniques to reduce the cooling energy cost. Economizers, evaporative and adiabatic coolers, and free cooling chillers are adopted among data centers during summer and winter conditions. Also, the adoption of direct liquid cooling and liquid immersion cooling solutions is growing among data center operators built to support a rack power density of over 20 kW. Most data centers are being designed based on the American Society of Heating, Refrigeration, and Air-conditioning Engineers (ASHRAE) guidelines.
In Latin America, several facilities adopt systems that support a combination of free cooling systems in data centers for most of the year. This enables data centers to reduce a considerable amount of energy consumption, leading to the operation of a facility at a PUE of less than 1.6. The average PUE of facilities is reducing YOY, and it is likely to decline to around 1.4 during the forecast period. The data center market in Chile comprises data centers that operate with evaporative coolers and CRAC units. The rest of the Latin American market adopts both chilled water systems and air-based cooling systems.
The North America market has a strong presence of general contractors and a strong sub-contractor base. The competition among general contractors will increase over the next few years. Expertise in developing data centers within a short period, i.e., less than one year, will be a key criterion for data center operators in selecting general contractors.
Due to the increased investments in mega data center projects in the US market, there is a high requirement for construction contractors in the country. Moreover, infrastructure vendors are increasingly partnering with major contractors to increase their revenue share in the industry. Tax incentives and the availability of free cooling solutions are some of the other factors included while selecting a site for data center facilities. In the US, most states provide tax incentives for data centers; also, they provide sales and property tax and job-based tax incentives.
In Latin America, Constuctora Sudamericana, ZFB Group, AECOM, and Aceco TI are prominent construction contractors, engineering, and architecture firms. Also, the presence of modular data center developers such as Etix Everywhere and Huawei has helped the growth of modular data center buildouts or procurement in the last two years. Latin America is experiencing strong growth in greenfield construction. This will bring significant revenue opportunities for contractors and subcontractors operating in the market.
The retail colocation market is likely to be driven by the increased demand for colocation services from organizations in developing countries, especially in Latin America. Several existing retail colocation service users are expected to opt for wholesale colocation capacities during the forecast period. As cloud-based service providers colocate wholesale spaces across the region, customers are likely to consider cloud-based solutions as their data will be stored locally or close to their country of operation. Overall, the retail colocation segment is expected to lose market share to the wholesale colocation segment.
The adoption of wholesale colocation services is growing across due to the increased demand for computing capacity from global enterprises, cloud providers, big data, and IoT organizations. Factors such as high bandwidth, minimum power capacity, and the capability to expand the space of data center are increasing the demand for wholesale colocation. The increasing demand for wholesale colocation services is likely to lead to multiple mega and hyperscale data center projects across the region during the forecast period.
The US is the largest market for colocation globally, contributing to around 40% share in revenue in 2019. In terms of colocation service revenue, the US market is expected to reach over USD 20 billion by 2025. In terms of investments, the increased power consumption and carbon emission levels have prompted data centers to install energy-efficient infrastructure and procure renewable energy sources for their facilities.
The investment is expected to grow steadily in the US during the forecast period as cities such as Chicago, Dallas, Atlanta, Ashburn, Los Angeles, and Phoenix have taken initiatives toward developing smart cities with multiple connected devices and edge data centers. The US hosts around 1,300 colocation facilities. Virginia is the highly sought-after location for colocation in the US. Texas, Arizona, Illinois, North Carolina, California, New York, and Florida are some of the major locations for the colocation data centers in the US.
In the Americas, Digital Realty is the largest colocation provider with a revenue share of around 12%. In 2019, Digital Realty operated around 120 data center facilities. In North America, Digital Realty will continue to invest in millions of square feet throughout the forecast period, aiding in the strong growth of its revenue by over 10% YOY.
Digital Realty is followed by Equinix with a revenue share of close to 11%. As of 2019, Equinix operated about 86 facilities in the Americas, with a total cabinet capacity of around 110,900.
CyrusOne is the third-largest revenue contributor to the Americas data center colocation market. The company operates over 40 data centers in the US. It also entered Latin America by investing around $12 million in ODATA. Apart from these providers, Flexential, Switch, QTS Data Centers, NTT Global Data Centers, CoreSite, Cyxtera, and TierPoint are among the significant contributors to the colocation services market in the Americas.
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